Because of the sized-down nature of Liberty City, driving at a speed similar to real life will seem much faster in-game. If one wishes to make cars faster and more back-heavy to emulate realistic conditions, one thing that must be accounted for is that the car's default speeds are scaled down to match the city. Cars on the default handling are slower, have softer suspensions, and are more prone to understeer than their real-life counterparts (and don't properly emulate things like drive wheels and weight distribution). With proper fine tuning, the handling in GTA IV can be made more realistic than its default state.
The resulting handling feigns realism, but isn't realistic.
In addition, fine-tuning handling and performance would be very difficult for both game developers and third-party modders. This is most likely due to the fact that a physics simulation would be too much for most computers to handle, especially with the amount of cars working at one time. The way cars handle in GTA IV is based on a series of algorithms and equations rather than physics simulation.
